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Mainzeal leaky building fallout

By Andrew Steele - 8 Feb 2013

"Word on the street" is that Hobson Gardens' multi-million dollar "leaky home" claim against, amongst others, Mainzeal, the original builder of the complex, was settled on the basis that Mainzeal agreed to supply labour and materials for the repair of the building.  If this is true, then Mainzeal's promise will represent a multi-million dollar settlement.  Mainzeal's unexpected receivership must place its performance of any settlement promises in jeopardy.

Martelli McKegg was not involved in the Hobson Gardens claim, but it regularly acts for body corporates and unit owners in unit title development "leaky home" claims. 

In situations where settlement contemplates provision of labour by a defendant contractor, one obvious and critical protection for claimants is that the defendant's promised performance be secured by a "performance bond".  This can take the form of a bank guarantee which provides money security for the defendant's performance or a dependable guarantee by some other substantial third party.  If a valuable bond is obtained, then it may not matter if the defendant fails to perform as promised, because the units owners may call upon the bond to have the work done by an alternative contractor.

However the settlement agreement was worded, we sincerely hope the owners of Hobson Gardens have been adequately protected so they avoid being left high-n-dry by Mainzeal's misfortune.

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